Chrysler expects to make money in 2012
May 5th 2009 7:30AM
Updated Dec 3rd 2009 11:46AM
Perhaps as a way to get a bankruptcy judge to allow its Chapter 11 to go forward, Chrysler says it will make money in 2012.
If a court believes that assertion, it may be easier to believe that the company does not have to be liquidated. A number of creditors would like to see a sale to Fiat knocked down in favor of selling off Chrysler's assets to the highest bidder.According to The Wall Street Journal, "In documents presented to the court, Chrysler revealed it lost nearly $17 billion last year but predicted it can return to profitability by 2012 if it can exit bankruptcy quickly and form an alliance with Fiat."
The forecast is a fantasy. Chrysler may be able to estimate what its expenses will be in four years, but it can hardly give an accurate forecast of the extent to which the American car market will recover. Even if the recession is long over by then, people have learned that they can keep their cars longer and avoid buying new ones every two or three years.
The court is likely to see through the Chrysler projections and ignore them as an argument for allowing the Chapter 11 to go through.
Douglas A. McIntyre is an editor at 24/7 Wall St.